Why don’t we trust HMRC?

Posted: November 7, 2017 in Uncategorized

Why don’t we trust HMRC?
With an annual budget of £3.1bn in 2014/15 HMRC raised £518bn of tax (and paid out £43bn in benefits the majority of which are State Pension payments accrued by national insurance contributions)…

Waiting for Godot

With an annual budget of £3.1bn in 2014/15 HMRC raised £518bn of tax (and paid out £43bn in benefits).

The £3.1bn number is so low in good part because around 98% (237,000 enquiries of 11m returns) of personal self-assessment returns go unchecked. We allow them to go unchecked because we believe the overwhelming majority of taxpayers to be compliant. This is often what we mean when we talk of tax being “voluntary”: by and large, no one checks what we say about what tax we owe.

This state of affairs is not unusual to the UK. It is baked into almost all tax systems. It works well when what the OECD calls ‘tax morale‘ – citizens’ motivation to pay their taxes – is high. But if tax morale declines, the tax gap (the difference between what should be and is paid) is apt to widen, receipts to fall and costs to…

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